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tv   Power Lunch  CNBC  April 12, 2013 1:00pm-2:00pm EDT

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some time. i like the coffee deal that we saw today. >> i like macy's a lot. a lot of put value. >> the stock goes higher with higher container board pricing. >> we'll see you monday. >> there were twins trading millions in a currency that most americans have never heard of while their nemesis stole the show on immigration. big names carrying big sticks and we got a look at the average bob billionaire.
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>> welcome. special edition of power lunch. maria in the house. the eyes and ears of wall street. good as always. robert on money, power, and spending of the world's ultra rich and business insider. henry, goo d to have you with u. leaving court yesterday. he is being charged with insider trading after admitting to passing inside information about his clients to a golfing buddy. a california jeweler named brian shaw. they both admitted and both were immediately contrite. if anybody can talk about this in an informed way you can.
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secondly, how up front they were about admitting what they did. >> this is a classic insider trading case. you have somebody with real inside knowledge giving it out, getting a cash kick back, rolexes. if you designed a joke on a sitcom, it would look like this. i assume what happened is investigators said here's the evidence, you're obviously guilty, do you want to try to deny it? >> these guys were both very contrite. did it surprise you that they came out so quickly and basically admitted blame? >> we spoke to the lawyer the day before. what really strikes me is the fact that here is a guy who has been at kpmg for 30 years. 50 years old. he's a career kpmg guy. he starts giving this
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information to scott london who is doing the insider trading and scott london turns on -- shaw ultimately turns on london. here we have got the charges on london but brian shaw, what happens to him? because he's the guy who made more than $1 million. i wonder if he did a deal with the government to lessen his sentence. i say you want to say the market's not rigged? that feels like it is. they're wealthy guys. you hear that shaw had business
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problems. >> london i don't understand other than a lot of these guys hang out with rich people. they were members of the golf club. london was only getting 10% of the profits of the trading and a rolex. he could have at least held out for a better watch. >> you will hear from rolex now. >> he wasn't making all that money. so it's this upward mobility, this quest to be among the truly wealthy. he's a kpmg guy and wanted to improve his life. >> he thought he made -- he just learned today that it wz a million dollars in profit. >> let's go out to jane wells.
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she is going to fill us in on what the latest is. jane? >> i got the north ridge country club where this whole thing started. one of the members just walked by and said he had played golf with him before. how does this happen? 50,000 of that secured through cash and property. 100,000 of it unsecured merely through his wife's signature. but outside court, outside court yesterday he was not saying much. >> do you have any comment? >> no comment. >> how did this happen? >> i'm not going to comment right now. >> federal authorities ceylon don's inside tips netted the highly paid auditor a mere 50 grand. as you have mentioned, cash, a rolex, springstein tickets.
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listen to this. >> a lot of that information comes from mr. shaw so i have told the u.s. attorney we're going to review all the information and my client will tell the government exactly what he remembers. and he tells me, for example, $25,000 in theater tickets makes no sense. there was never a payment at $30,000 at one time. there are a number of things that are wrong. we will give our position to the government. >> what about the rolex? >> he brought the rolex to court today and gave it to the government. >> along with any cash? >> $7500 in cash he gave to the government. >> the one question is will brian shaw, who lives in this
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gated community be charged as well? as you have said, his attorney says no deal has been cut or is currently in the offing as we speak. however, yesterday in court i have to say that shaw was originally listed in the paper work as a co-defendant. that phrase was removed at least for now. for those wondering here at the golf course, are there usga handicaps? >> pretty good golfers there. i guess they have plenty of time to do that. they have been on a run. record levels for the s&p and the dough this week. i know you follow trim tabs and the fun flows. >> i know that part of it, what is indicative of bull markets i don't think anybody wants that
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right now. if you remember the 90s, we were all witness to. the valuations were like 27, 28, 29 times earnings. times forward-looking earnings. so valuations are not excessive if you're just going to look at the typical way you measure earning earnings. a technician will tell you the reason this market keeps going higher over the long term is because nobody believes in it and everyone is always questioning it. back in the 1990s.
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>> nobody may be more connected. >> what's the difference this time? >> a 15 year high. >> everybody is here. warren buffet pointed out. it sets off. >> that's what they did in 1982. >> exactly. >> that's what you have got to look out. >> a bit of a sell-off.
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the economic fundamentals are not justified. >> we focus so much on stocks. . >> around a million dollars. it ended up going for $6 million. some of the prices were two or three times the estimate. so if you look more globally. suggest that we have either minibubbles or a large bracket. extrapolate from that. -- it is only about 15. that's not an extraordinary valuation.
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>> no, it's not. let me put iron ore on there. at the end of the day, the secret is getting out. we have so much shale in this country. natural gas in this country. as a result we are rich in that commodity. once we get the construction going, more pipelines, shale, fraking. oil prices will continue to go up. >> it's a national security issue as much as economic security. >> i totally agree with you. i think that story is slowly but surely getting out. the opportunity around shale. i think oil is its own story. from building materials to your iphone to everything else. copper is an industrial commodity. the fact that it is down and
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iron ore is down does tell you something. sure there is growth but it's just not great. >> does that mean that this rally is a sucker's rally? the smart guys are getting out because prices have gone up as far as they're going to go? >> i think insiders can be as bone headed as anybody else but it's certainly not a good sign. to me the biggest fear are way, way above normal and profit margins tend to revert to means. >> you know, you talked about the alternative investments. i guess you could say that one of the investments that has not worked out is j.c. penney.
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is there breaking news there? judge says j.c. penney is going to be able to sell non-branded martha stewart products. >> we do have breaking news. j.c. penney will be allowed to sell non-branded martha designed products. this stands through the end of the trial when we hear the judge's final decision. they will be allowed to sell non-branded martha designed products. >> we know more now about what's going to happen with j.c. penney. out goes johnson. in comes mike oman in the seat. now they will get the advantage that they wanted to sell martha's materials but not the branded version. >> we had two pieces of news
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that tell us this company is stabilizing. i think he comes in and they have to calm things down. >> you have got these interestk personalities here. probably talked to his book just a bit, shockingly, that the stock is going to be $75 this year. basically to make him whole but he's taking a path in j.c. penney stock. >> ron johnson is a big debate out there. sales plummeted after his no sale comment. the stock plummeted throughout his tenure and yet there are
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other people who think this guy is just magical when it comes to retail. he basically said i was there watching what johnson did with the retail stores at apple. he should go to samsung. i'm just saying. >> one of the things he said that was very interesting is when you had him on your program is that samsung and lots of the manufacturers have gone with larger screens. apple has not and now they feel like a little bit like they're being left behind. >> they have the ipad. >> they do but that's not a phone. >> samsung made the phone bigger and apple fans said it's ridiculous and perfect. apple said ours is the perfect size. samsung is selling a ton of them and there is a lot of pressure
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on apple to come out with a bigger screen. i think that apple sometimes gets a little smug and says you will take this and you will like this. it's almost henry ford like. i will make you any car you want so long as it is black. they have been proven right a lot of times. >> at the end of the day, people do go where they feel like smarter people are. the question everybody was asking when steve jobs died is are we going to see a big group of people leave apple because the reason to go there is no longer there. is talent going to leave and go to samsung? >> we're going to take a quick break and come back to you. we will be right back after this.
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>> welcome back. we are back. big coin in a bit of a mess. sparking a rush of activity and overwhelming trading platforms. it's a virtual currency. it does have a logo.
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if you want to buy them you do so online at websites where you put in your account numbers and the amount of bitcoins that you want to buy. they have been around for four years but the new york lounge just started accepting the digital currency last week. >> it's irreversible. they are instant. they are private. the fee is less than 1% to accept it. and they get their money the next day in their bank account. >> the tab in dollars, is put together. and bit pay takes the coins from the wallet and sends dollars to the bar. but the problem is that it takes a lot more to buy a beer today than it did yesterday, last night it was down 77% since
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wednesday. recent gains lo from year peens looking to stash cash. its volatility casting doubts on responsibility to replace dollars and cents. where one moves is cause for alarm sometimes. reportedly they owned about $11 milli million. they were created as an unidentified human purn. there are only 21 million -- only supposed to be 21 million bitcoins, 11 million in circulation presently. it is very appealing to free market advocates and it seems it
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is appealing to speculators as well these days. >> thank you so much. such an interesting story. what do you guys think about that? >> two key points. one is the underpinning makes some sense. we have had incredible devaluation over time because you have government issuing more. politicians want to get re-elected. there are a lot of advantages to it. and then you have this bubble aspect. >> what did you say? did you like it? >> it's perfect for a bubble because you cannot value it. it is simply determined by supply and demand. i can make an argument that it's worthless. >> you just don't know. >> your loss is 100%.
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your gain is infinity, i presume. >> it's beanie babies for 2013. there was the greater fool theory, someone else will pay more. they want things they can touch or feel. i don't see this being a real investment. it is actually a negative. >> you can't use beanie babies to buy things. and bitcoins. >> this totally reminds me of back in the 90s when we threw all fundamentals out the wip doe.
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>> it seems to me like a super mario game where you go around and collect the coins. >> i have been gloriously uninformed about this and now we're talking about it on television. >> i don't want a virtual wallet. >> i would like to think my bank is safer than having money in bitcoins. do you want to be paid if bitcoins? >> which means greater fool in japanese. >> the billionaires. are their lucky or really smarter than the rest of us. >> can you guess which ceos play golf the most? stay with us. we'll give you the answer.
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>> welcome back to power lunch. are billionaires rich because they're smart or because they're lucky. a new study shows that billionaires are actually smarter than the rest of us. 45% of billionaires are in the
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top 1% of smartness. >> a big debate in america. hard work is what gets you there. do you think intelligence is what makes you rich? >> you have met a lot of ceos. many more than i have. would you say they are clearly smarter than the rest of snus. >> i think it's intelligence and luck. >> luck, work ethic, willingness to take risk.
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>> you have mark zuckerberg and bill gates. >> steve jobs. he didn't finish one year. >> michael dell. >> that's interesting to measure it that way. >> is that how they measure it? it wasn't an iq test it was educational attainment? >> the main one was whether you attended an elite university. i have met billionaires who dropped out of high school and didn't go to college. there is that subset. we're in a knowledge-based economy. education is really key. >> that's also networking. if you're measuring it by college or grad school. >> or your parents. >> also don't forget about education. when you look at the rate today, the national unemployment rate
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is a lot higher among college graduates. >> i remember meeting bill gaits and he and i are exactly the same age and we're basically the same height. >> where is this going? >> what's the difference between you and me because at the time $8 billion. >> exactly. >> it was clear, his brain was just wired a lot differently than my brain and i walked away going i can see it. >> he dropped out of harvard. he took a huge risk. >> no. no. i'm a risk averse kind of guy. >> and there is that 35. >> our billionaires just smarter than everybody else? 52% said yes, how else could you be more rich. and 48% said they have a leg up on everyone else. >> would you keep your money in
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>> check on markets. gold prices are closing right now. breaking at 1500 dollars for the
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first time since july 2011. it is officially a bear market territory. >> yes, it's falling but no major detriment. as you can see there, yields moving down. ten year at 1.72%. and that is your bond report today. >> it was 210 not too long ago. >> let's talk about big news in
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banking. >> wells fargo, the nation's biggest branch has redesigned and kept growing. banks sought to take over every street corner. now over 100,000. operator: -- operator: in the u.s. what you're seeing is the bank's new minibranch it's one fifth
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the size of a typical branch. walls will give way to advisors and tellers during business hours. it costs half what a normal branch could cost. it will build twice as many. >> the last time i went to a branch was only to take my coins in. >> i always use that. >> that's a good little thing. the other bank i use because i'm linked to my son's account is chase. in my town in new jersey there are three chase bank branchs and
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i'm talking big old style sand stone banks within a mile and a half radius. >> i know chase is losing money on me. i go deposit my check and get my two free lollipops. i never buy services there. you never see people buying investment products they are selling. it's a matter of time. >> there was a big report on this, basically looking at investment banks and the large universal banks and the analysts said these large tier one investment banks are uninvestable. it is less about earnings and less about margins and more about the regulatory environment.
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that are facing litigation, they are getting sued left and right and they're facing new rule change changes. >> really talking about them as investments. i think the world is catching up. >> a large bank, one part of the bank can yoffset another part o the bank that can be doing well.
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>> when you get to market, that's up 10% and money is going into stocks. >> and what cruise ships are doing to get you back on board. would you use a bank that doesn't have branchs or go on a cruise? how about the 14-year-old who shot a 73 yesterday? here are the ceos that like to play golf the most. [ male announcer ] i've seen incredible things.
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>> welcome back to power lunch. after waiting out the housing crash, baby boomers are on the move again. but the recession may have changed their direction. >> they also don't want to risk homeownership in the burbs again
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where property values fell. >> housing is not as secure as anybody thought it was or as it used to be. the urban condos have recovered faster. >> developers are responding, rushing to put up condos and apartments in high density areas. they are creating new urban cores where retailers are restaurants are rushing in as well. >> the drivers are demographics. they drive us towards locations where we're going. >> another reason baby boomers are going to the cities is to be closer to their grown children. boomers like their children and have better relationships with them than they did with their own parents. back to you guys. >> thank you very much. it has been a rough year for the cruise line business, particularly carnival cruise lines. first it was the capsized carnival concordia. then it was the fire that
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crippled the triumph in the gulf of mexico. there have been a lot of problems. >> there really have. you have to wonder what this has been doing to the actual cruise business and whether or not you even want to go on a cruise any more. there was a gastritis outbreak forcing it to close. that cost the economy millions. then a storm caused the triumph to break free of its peer in mobile. that was also amazing. one of my guests this weekend is leisure international's editor. what happens next and whether or not consumers are willing to take a chance on a cruise that's on cnbc sunday night and it's on nbc, syndicated after meet the
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press. >> do any of these events increase or decrease your appetite to go on a creauise. >> there are cruise people and non-cruise people. >> i know this would not have stopped him. he loved the whole thing. the food, the entertainment and the like. i think there are people that this won't matter to them. >> did he like that he was going somewhere. >> it didn't matter. >> it was life on the water. >> i sent my parents on a cruise to the bahamas for their 50th wedding anniversary. and three days we found one cruise for $46 a night.
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>> that's a little scary. >> he said with all the fees and port fees and all of that stuff it gets you up to about $75 possibly a night. $75 a day to go on a cruise to the babahamas. >> just the idea of spending four or five days with 5,000 people with people i don't know and like. >> thanks for coming in. good to see you. up next, blackberry, the chief there is fighting back against an analyst. taking on the analyst. more power in two minutes.
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>> the white house is reporting that the president had income of $608,000. the vast majority is salary. he paid $118,000 in taxes and gave $115,000 to charity.
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>> is it royalties on boks? >> i haven't looked over all the returns. >> the bidens released their returns as well. about $385,000. and they gave $7,000 to charity, of course. everybody knows the bidens have been in public service for a long time. they have not accumulated wealth the way the obamas did because of the publication of the
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president's books which did very well. they paid their tax rate, their effective tax rate was higher than the obamas, but the charitable deductions were lower. >> there are a lot of things that end up reducing those effective rates. the top rates are only paid on a portion of the income. all of those are factors that reduce it below the top rate.
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>> his taxes would go up. let's go up to mandy for street signs. >> we're going to ask our guest what gold is telling us. and bitcoin, was it teething pains or is it really just a gamble in unproven technology. and our ode to national grilled cheese day. the markets are all very interesting. we're going to have a bit of fun. >> let's look at where blackberry is trading now. henry, you were an analyst.
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i'm sure you made ceos angry. >> you can't say anything negative without it. somebody does proprietary research. >> investigating? >> that's way too much. we will show you the corner. fine. ordering an investigation? come on. >> this is news that analysts matter again. >> nobody cares. >> against an analyst in years. >> since roger was an analyst. >> it's happening again. zuckerberg calling on legislation to fix the prop. we'll debate that when we return.
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but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
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we don't have exact numbers of successful immigrants, but they have produced a lot of good things. >> sort of hard. >> it's very hard.
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>> you follow a lot of folks in silicone valley. not enough people to fill the high-tech engineering job. >> they are they are sent out of the country. having said that, there are 11 million more americans without jobs. i thought that until i re-read the other parts. so americans can get trained for the skilled jobs. and third was to invest more government money into science and technology. >> that's the key. i actually believe that anyone who needs it and gets a higher degree in one of the sciences. >> they are cheering you.
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>> they found a way to rise and shine and get your shoes shined downtown. we have more when we're back. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years.
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>> the three amigos can't let
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this one go by without comment. a business is called star shine. the shop charges $7, double the average price but as one trader said it's better than having a 75-year-old guy do it. any thoughts here? >> i do need to get my shoes shined. these women are clearly beautiful. i'm not sure if they follow banking very well because bankers don't work on wall street so they may want to relocate. >> what is this? it's just too much, man. henry? are you silent? >> the business knows his customers well. >> i said before to my father-in-law. i remember sitting in front of the time life building in the summer. and young women in hooters style shorts would come and give out free
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